Investment Banking and Corporate Development issues relating to Technology

Tuesday, August 11, 2009

Google “on to” more video with acquisition of On2 Technologies

On Aug 5, 2009, Google announced its acquisition of video-compression software maker, On2 Technologies , for $106.5 million in stock. The deal value represents a 58% premium to prior day’s close and represents a 6x Enterprise Value to LTM Revenue multiple.

With the acquisition, Google is expecting On2's technology to advance its efforts of increasing the amount and quality of the video it brings to consumers either via its YouTube video-sharing site, it's new mobile-device operating system, Android, or other ways to bring video over the Internet to consumers.

Google continues to expand into other non-search related businesses such as operating systems, mobile and video, positioning itself squarely against the likes of Microsoft and Apple. Eric Schmidt’s resignation from Apple’s board tops the latest signs that Google wants to be the enabler and the hub of the digital infotainment lifestyle.